Government to be richer by Rs19,600 cr as CIL declares 290% dividend

State-owned Coal India Ltd, the world's biggest coal monopoly that supplies around 83 per cent of the fuel used in the country, on Tuesday declared a record interim dividend of 290 per cent for 2013-14. At Rs29 per share, total comes to Rs18,317 crore, of which the union government, with its 90 per cent stake, will get about Rs16,485 crore.

coal miningAfter including the dividend distribution tax of Rs3,113 crore, the bonanza for the government is Rs19,598.76 crore. In an election year, this should bring it some cheer, as it has fallen dismally short of meeting its target of Rs40,000 crore from disinvestments in the fiscal year that ends in March. Its plan to divest 5 per cent of its stake are facing strong opposition from trade unions.

"We have approved a dividend of Rs29 per share of the face value of Rs10 as recommended by the audit committee of company," CIL chairman S Narsing Rao told reporters in Kolkata after a board meeting.

The public sector unit, which was sitting on a cash reserve of Rs62,236 crore as on 31 March 2013, will pay the dividend from 25 January. Last year, it had paid Rs9.7 per share as an interim dividend and paid it from March 2013.

The announcement follows a meeting between finance minister P Chidambaram and chairmen of top PSUs, including CIL, the Oil & Natural Gas Corporation (ONGC), and Indian Oil Ltd, last Friday as the government is on an overdrive to meet its disinvestment target.

Coal India's announcement of interim dividend could be first on the list of blue-chip or 'Navratna' public sector companies paying special dividends and many more PSUs like ONGC, GAIL, National Thermal Power Corp (NTPC), Steel Authority of India Ltd (SAIL), and the National Mineral Development Corp (NMDC) may make dividend announcements soon, according to a PTI report.

Moreover, the government is also working to sell its residual stakes in several private firms, including Hindustan Zinc, Balco (Bharat Aluminium Co), and Axis Bank to meet the disinvestment target.

The government has so far collected about Rs3,000 crore through disinvestments in the Minerals and Metals Trading Corp (MMTC), Hindustan Copper, Neyveli Lignite and National Fertilisers.

The finance ministry had virtually ordered CIL to pay a special dividend if the government's stake sale did not take place. "If CIL does not go for divestment, then they have to provide us a special dividend," economic affairs secretary Arvind Mayaram had said earlier.

Asked whether this dividend meant the stake sale plans have been scrapped, chairman Rao said, "Who am I to speak on stake sale?" hinting that the decision was entirely up to the government.